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Daily News Flash, 12th July, 2017

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INFLATION CREEPS UP TO 5.72PC IN APR-JUN QUARTER ................................................... 1

STEEL SECTOR HAS HUGE GROWTH POTENTIAL ................................................................ 3

CURRENT ACCOUNT DEFICIT HITS $2.1B ............................................................................ 4

10 FIRMS PROVIDE 40PC OF ALL VAT AND SD ................................................................... 4

DSE TURNOVER HITS 4-MONTH HIGH ............................................................................... 5

OIL, GAS INVESTMENT SET TO RECOVER SLIGHTLY ............................................................ 6

RENTAL POWER SPONSORS BAG KINGS RANSOM AS INCENTIVES ................................... 6

INFLATION UP AMID PRICE RISES ...................................................................................... 9

BB PROBE DETECTS ANOMALIES IN FINANCIALS OF FIRST FINANCE ................................. 10

MORE COS ISSUING CASH DIV THAN BONUS SHARES ...................................................... 11

DSE DAILY TURNOVER CROSSES TK 13B-MARK ................................................................ 12

FOUR BANKS AMONG THE TOP TRANSACTION CHART .................................................... 13

INVESTORS BOOK PROFIT ON QUICK-GAINING STOCKS ................................................... 14

DEFAULTED LOANS GROW 191PC IN 8YRS ...................................................................... 15

GOVTS FY17 BANK BORROWING LOGS NEGATIVE TK 18,029CR ...................................... 16

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INFLATION CREEPS UP TO 5.72PC IN APR-JUN QUARTER For the first time in the country's history inflation data was released in a quarterly format, doing away with the global standard practice of releasing monthly data -- much to the criticism of economists. In the last quarter of fiscal 2016-17, inflation edged up about 44 basis points from the previous quarter to 5.72 percent, according to the data unveiled by Planning Minister AHM Mustafa Kamal yesterday. The reason for the switch to quarterly reporting put forward by Kamal was the veracity of the monthly data: the Bangladesh Bureau of Statistics is unable to capture the monthly changes in the Consumer Price Index timely. If data is released every month, in many cases the data is not accurate, he said.

DSEX 03.60 Gold (Ounce) $1,209.60 Dollar 80.60 (Buy) 80.60 (Sell)

CSCX 35.60 Oil (Barrel) $43.98 Euro 91.88 (Buy) 91.89 (Sell)


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The switch in reporting frequency comes at a time when inflation, a measure of changes in the prices of a basket of goods and services, is on the rise owing to a spiral in the prices of rise, Bangladesh's staple food. For instance, inflation stood at 5.03 percent in December last year, which crept up to 5.15 percent, 5.31 percent and 5.39 percent in the succeeding three months respectively. The decision to switch from monthly to quarterly CPI is a step in the wrong direction, said Zahid Hussain, lead economist of the World Bank's Dhaka office. The government move makes it the work of analysts and policymakers much harder, as they will need to base their inferences, forecasts and economic decision-making on hard and current data. Almost everything that the government and the Bangladesh Bank decide is justified by how the data are moving lately. And those decisions are viewed by the public and other stakeholders -- including the multilateral financial institutions, investment banks, rating agencies, development partners, and civil society -- against the underlying data, he said. The importance of sound and accurate early estimates of economic trends is of utmost importance to national economic authorities for the decisionmaking process. All over the world, an increasing number of countries are producing high frequency economic data. Why BBS is moving in the opposite direction is hard to fathom, he added. Kamal had earlier said the BBS will continue to prepare data on a monthly basis, which will be made available on the statistical agency's website. As of 6pm yesterday, no monthly data past the month of March was available. Between the months of April and June this year, both food and non-food inflation went up, according to the planning ministry data. In the last quarter of fiscal 2016-17, food inflation stood at 7.27 percent, up from 6.74 percent in the previous quarter. A year earlier, it was 3.96 percent. Non-food inflation during the quarter stood at 3.47 percent, in contrast to 3.12 percent the preceding three months. Inflation rose mainly due to the increase in prices of rice, whose stock in government warehouses is on the decline and production too was hampered due to natural calamity. On July 9, the stock of rice stood at 1.67 lakh tonne. The government took various steps to increase the stock but the rice price did not come down. Coarse rice is still selling at nearly Tk 48. Meanwhile, inflation stood at 5.44 percent last fiscal year, down from 5.92 percent logged in for fiscal 2015-16. Food inflation was 6.01 percent last fiscal year, up from 4.90 percent a year earlier. Non-food inflation was 4.61 percent, down substantially from fiscal 2015-16's 7.43 percent. The overall inflation declined in fiscal 2016-17 from a year earlier because of a significant decline in non-food inflation, Hussain said. But the decline masks the steep rise in food inflation. The aggregate demand growth slowed in fiscal 2016-17 due to 15 percent decline in remittances and depressed earnings in garments. Monetary restraint also helped, he said. The rise in food inflation reflects mostly rice price increases due to cost push factors such as high tariffs on rice imports as well as production shortfalls due to early floods and blast outbreak and a decline in public stocks. Measures taken recently by the government such as reduction of duties, allowing zero-rated letters of credit margin requirements for rice imports and the government-to-government procurement of rice from Vietnam should help ease rice prices in the immediate future. The BB should maintain continuity in its forthcoming monetary policy statement so that the success

achieved in reducing food inflation is sustained, Hussain added. Source: http://www.thedailystar.net/business/inflation-creeps-572pc-apr-jun-quarter-1431877

http://www.thedailystar.net/business/inflation-creeps-572pc-apr-jun-quarter-1431877


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STEEL SECTOR HAS HUGE GROWTH POTENTIAL The country's steel manufacturing sector has a huge growth potential thanks to the increasing construction activities and a good trade prospect in the neighbouring Seven Sister States of India, experts said. Bangladesh currently consumes around 8 million tonnes of steel a year, which would reach 18 million tonnes by 2030 if the port's existing problems like the lack of infrastructure, power crisis and tariff barriers are addressed soon, they said. Senior officials of different steel related industries from Bangladesh and India shared their views at the third Steel Long Products Summit held in Chittagong yesterday. Steelgroup.co.in, a leading information and networking platform based in India, organised the programme at Radisson Blu Chittagong Bay View. Representatives of different steel manufacturing and equipment suppliers from Bangladesh, India, Germany, Austria, Taiwan, China and Japan took part in the daylong event. Indian Assistant High Commissioner Somnath Halder and PHP Group Chairman Md Mijanur Rahman jointly inaugurated the summit. AS Firoz, chief economist (joint plant committee) of the Ministry of Steel of India, and Sachin Shetty, managing partner of Quesrow Consulting, were the keynote speakers in the inaugural session. A panel discussion on Regional steel long products market: present and future challenges and solutions also took place at the summit. The challenges that Bangladesh's steel sector is facing now was experienced by the Indian steel producers 30 years back and they overcame those, VR Sharma, group CEO for steel and power at Abul Khair Group, said at the event as a panel discussant. He forecasted that Bangladesh's steel market would be able to produce up to 18 million tonnes of steel a year within a decade as the country now generates very good engineers and what they need is training on handling of mega steel plants. With increasing development and construction activities in the densely populated cities, this country of many rivers would also need many bridges for more connectivity in the coming years, for which more steel will be needed, he said. He also emphasised considering the neighbouring Seven Sister States of India as the potential market for Bangladesh's steel sector. Don't think that your market is of 17 crore people, rather it is a market of 30 crore. M Firoze, head of marketing and product development at Bangladesh Steel Re-Rolling Mills (BSRM), said it is true that new investments are coming to the steel sector but it is basically in the long product sector. BSRM is the largest group in Bangladesh's steel sector that produced 1.2 million tonnes of finished goods last year. Bangladesh still lacks the infrastructure to turn up as a big steel maker since it does not have resources like coal mine or iron ore mine and has to depend on imports, he said. Moreover, due to lack of facility in the port, ships bringing raw materials like scraps have to wait several weeks to be cleared, for which the steel makers count a loss of $20 per tonne, he added. He also marked power outages and tariff barriers in import of raw materials like billets as obstacles for the country's steel sector. Madani M Intiaz Hossain, executive director of GPH Ispat, stressed the need for incorporating new technology by the steel makers to produce high quality finished products. Source: http://www.thedailystar.net/business/steel-sector-has-huge-growth-potential-1431751

http://www.thedailystar.net/business/steel-sector-has-huge-growth-potential-1431751


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CURRENT ACCOUNT DEFICIT HITS $2.1B The country's current account deficit hit $2.1 billion in the first 11 months of the just concluded fiscal year due to sluggish export earnings and higher import payments. This is an about-face from 2015-16 when the current account was in surplus of $3.19 billion. In fact the current account balance set foot into the negative territory for the first time in four years in the first quarter of 2016-17 when the deficit stood at $504 million. It has been on the rise since. The last time the current account was in the deficit was way back in 2011-12. The trade deficit also widened 42.58 percent year-on-year to $9.19 billion during the 11-month period. The widening of the current account deficit is still not a matter of concern, said a senior executive of Bangladesh Bank. He said the existing deficit is less than 1 percent of gross domestic product whereas a country is allowed to run a deficit of up to 2-3 percent of GDP. The central bank official, however, said the rising trade deficit could put a little pressure on the exchange rates. The current account deficit has already affected the exchange rate as the taka depreciated against the dollar. The exchange rate of the American greenback was Tk 80.60 per USD yesterday, up from Tk 79 in April, the central bank data shows. Exports only grew by 1.69 percent in the just concluded fiscal year. A massive drop in the shipment of garment items is blamed for the below-than-expected export earnings of $34.83 billion. On the other hand, imports rose 10.68 percent to $40.25 billion in the July-May period compared to $36.37 billion in the same period a year ago. The slowdown in remittance is also responsible for the current account deficit. Remittance inflow in 2016-17 was the lowest in six years, declining 14.47 percent year-on-year to $12.77 billion. Thanks to the slowing exports and remittance and the rise in imports, the foreign exchange reserves decreased to $32.40 billion on July 5, which was $33.39 billion in June, according to the central bank. Source: http://www.thedailystar.net/business/current-account-deficit-hits-21b-1431859

10 FIRMS PROVIDE 40PC OF ALL VAT AND SD Some 40 percent of the total value-added tax and supplementary duty collected in a year by the National Board of Revenue comes from only 10 firms -- a startling detail for a $220 billion economy that is growing fast. The companies are from cigarette, gas, mobile operator and power sectors, according to data from the Large Taxpayers' Unit, VAT. The disclosure also suggests extensive tax evasion by others. This indicates that VAT and SD collection from domestic economic activities is vulnerable to the fortunes of a few institutions, said Zahid Hussain, lead economist of the World Bank's Dhaka office. Bangladesh has 8.5 lakh firms registered under VAT but only 32,000 submit returns and pay VAT, much to the vexation of Finance Minister AMA Muhith. This makes it clear that VAT is confined to a limited area, Muhith said in his budget speech last month. Data showed that 157 firms accounted for 55 percent of the total of Tk 56,080 crore collected as VAT and SD from domestic economic activities in fiscal 2015-16. Of the sum, Tk 30,417 crore came from LTU-VAT, 75 percent of which, in turn, were from 10 firms. VAT paid by the top revenue-generating firms such as British American Tobacco, Dhaka Tobacco Industries, Petrobangla, Grameenp-hone and Titas Gas stood at Tk 26,045 crore in the first 11 months of fiscal 2016-17.

http://www.thedailystar.net/business/current-account-deficit-hits-21b-1431859


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The amount was 72 percent of the total VAT collected by the LTU in the just concluded fiscal year, according to preliminary data released by the NBR. Data by the NBR's field office also showed that five sectors -- cigarettes, gas, mobile operators, pharma-ceuticals and banks -- provide 88 percent of the LTU's total collection in a year. This indicates the narrowness of the existing tax base and the scope to evade VAT, Hussain said. The tax base is narrow because of the prevalence of different rates of VAT under the VAT Act 1991. As a result, there is scope for discretion by revenue officials and it creates grounds for corruption. The state becomes a loser as all the indirect tax paid by taxpayers does not make it to the coffer in the end, the WB economist said. This also explains the recent resistance from many businesses against the implementation of the new VAT law that aimed at eliminating multiple rates and limiting discretionary power of revenue officials, he added. In the face of opposition from many businesses, the government has shelved its plan to implement the much talked-about VAT and SD Act 2012 for two years. The legislation, which was framed to increase domestic revenue collection by tapping all areas of the economy, bring transparency and accountability in revenue administration and curb evasion, was planned to take effect from this month. Revenue collection would rise if the commissioners at field offices curb evasion and collect VAT properly, said a senior NBR official. There are hundreds of businesses that escape payment of actual amount of VAT because of corruption among a section of revenue officials. Subsequently, the official suggested strengthening the VAT intelligence office to curb evasion. A major chunk of revenue usually comes from large firms in every country, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh. For this reason, the LTU was formed -- to closely monitor the big firms. The implementation of the new law did not take off because of opposition of small firms, who now pay package VAT, which is essentially a discounted form of VAT, he said. These firms will not pay tax easily, Mansur said, adding that they should be brought under the net gradually by insisting that they keep records of their transactions. Like Hussain, Mansur also said the dependence on few firms and on a select few sectors to collect a big portion of VAT and SD is not healthy. The top VAT and tax providers of every sector should be brought under the LTU through periodic surveys by the NBR, he said, citing the establishment of many hotels and resorts in recent years. The contribution of gas, power, tobacco and mobile operators would be at best 15 percent of GDP, although they account for more than one-third of VAT and SD collected from domestic production in a year, said Towfiqul Islam Khan, a research fellow of the Centre for Policy Dialogue. It means that there is untapped potential for revenue mobilisation, he said, adding that the leakages must be stopped. Khan suggested reforms, digitisation of the revenue systems and expansion of revenue administration throughout the country to widen the tax base. Source: http://www.thedailystar.net/business/10-firms-provide-40pc-all-vat-and-sd-1431886

DSE TURNOVER HITS 4-MONTH HIGH Turnover on the Dhaka Stock Exchange reached a four-month high yesterday riding on the rally for a week. The daily turnover stood at Tk 1,320 crore yesterday, the highest since March 8 when shares worth Tk 1,302 crore changed hands. The turnover has been on the rise since last week.

http://www.thedailystar.net/business/10-firms-provide-40pc-all-vat-and-sd-1431886


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The key DSEX index has continued its gaining streak for three consecutive sessions. It closed the day 3.58 points higher at 5,830. The index, however, went through some major ups and downs yesterday, said an analysis of LankaBangla Securities. In the first hour, the index gained 54 points but only came down to 5,823 in the next hour. It recovered the lost ground in the last half of the session to end the day in the black. Banks, cement, foods and allied, and telecommunication were the only major sectors with positive returns, registering 0.87 percent, 0.35 percent, 0.10 percent and 0.08 percent gains respectively. At the DSE, 107 securities advanced, 195 declined and 29 remained unchanged. The DS30 and DSES indices were up 4.45 and 2.17 points respectively. Beximco Ltd topped the turnover list followed by Keya Cosmetics and Islami Bank. Source: http://www.thedailystar.net/business/dse-turnover-hits-4-month-high-1431754

OIL, GAS INVESTMENT SET TO RECOVER SLIGHTLY Investment in the oil and gas industry will see a tentative recovery in 2017 after an "unprecedented contraction" in 2016 and 2015 in face of stubbornly low energy prices, the International Energy Agency said in a report on Tuesday. The IEA said upstream oil and gas investment -- such as in exploration and production facilities -- fell 26 percent in 2016 in nominal terms to $434 billion, similar to the decline seen in 2015. IEA executive director Fatih Birol told AFP: "We do not expect a major rebound, as many hoped, in order to make up the difference." Total global energy investment fell by 12 percent in 2016. Source: http://www.thedailystar.net/business/oil-gas-investment-set-recover-slightly-1431745

RENTAL POWER SPONSORS BAG KINGS RANSOM AS INCENTIVES Owners of rental-and quick-rental power plants bagged over Tk 392.26 billion as 'incentives' from the government over the past decade sans generating electricity, said officials. The money was exacted by the private power sponsors in the form of 'capacity payment' stipulated in the contacts made with them when the government opted for a quick-fix solution to a nagging power crisis in the country. This amount is over 41.82 per cent of the total payments worth Tk 937.89 billion that the state-owned Bangladesh Power Development Board (BPDB) disbursed to all power producers against electricity purchase between July 2008 and December 2016, they added. The remaining Tk 545.63 billion of the total was paid to all the power-plant owners as energy payments during the period under consideration.

http://www.thedailystar.net/business/dse-turnover-hits-4-month-high-1431754http://www.thedailystar.net/business/oil-gas-investment-set-recover-slightly-1431745


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Capacity payment is a sort of penalty, which the BPDB is bound to pay to the owners of rental-and quick-rental power plants if the government fails to purchase a certain portion of electricity readily available with them. As per the power-purchase agreements, this penalty is calculated on the basis of 40 per cent plant factor of the oil-fired rental-and quick- rental power plants on average, a senior official of the state-run power board told the FE. There are, however, allegations that a section of unscrupulous power entrepreneurs are capitalising on the 'loopholes' in the contracts, leaving the government to count the cost. Some of the plants are failing to generate electricity in line with their commitments because of old and outdated equipment and generators of their plants but are shifting the blame for their failure on to the government to realise capacity payments, industry-insiders said. The rental and quick-rental power plants are also consuming more oil than specified in the contracts, they added. The BPDB has to pay around Tk 3.36 million per day to a 50- megawatt (MW) oil-fired rental or quick-rental power plant as 'capacity payment' in case of the former's failure to purchase electricity, Sources said the board had to pay around Tk 12.80 billion to privately-owned power-plant sponsors during the fiscal year (FY) 2007-08, which was 54.23 per cent of the total payments worth Tk 23.64 billion made to all power producers. During FY'09, the BPDB had to pay around Tk 15.06 billion to these plant sponsors, which was 48.84 per cent of the total payments amounting to Tk 30.83 billion made by the BPDB to all the power producers. Total capacity payments by the BPDB to privately-owned oil-fired power-plant sponsors during FY'10 amounted to around Tk 17.90 billion, which was 50.35 per cent of the total payments worth Tk 35.55 billion from BPDB to all power producers against electricity purchase. The payment was around Tk 29.73 billion to the private oil-fired power- plant sponsors during FY '11. The amount was 38.27 per cent of the total payments worth Tk 77.67 billion made by the BPDB to all power producers for electricity purchase. During FY'12, the board had to pay around Tk 50.01 billion to these power sponsors, which accounted for 40.64 per cent of the total Tk 123.04 billion paid to all power producers in electric bill. Its total capacity payments to the sponsors during FY'13 were around Tk 54.90 billion or 38.96 per cent of the total payments worth Tk 140.90 billion given to all the power producers against electricity purchase. Around Tk 47.14 billion had to be paid to these power sponsors during FY '14. It was 33.16 per cent of the total power-purchase payments worth Tk 142.13 billion. The FY'15 bill was around Tk 82.43 billion or 55.29 per cent of the total Tk 149.06. Total capacity payments during FY'16 were around Tk 53.76 billion or 38.35 per cent of the total Tk 140.17 billion paid by the BPDB to all the power producers against electricity purchase. The capacity payments were around Tk 28.48 billion during the first six months of FY '17, until December 2016. It accounted for 38.04 cent of the total power-purchase bill worth Tk 74.86 billion during this period. The government had launched a drive to install under private sector a significant number of oil-fired rental-and quick-rental power plants from 2009, as a 'short-term' solution to a nagging countrywide electricity crisis. The government also awarded private-sector sponsors several gas-fired power plants to be set up on rental basis. Most of these power plants were awarded on the basis of unsolicited offers under the Speedy Supply of Power and Energy (Special Provision) Act 2010. The law has a provision of immunity to those involved with the quick-fix remedies.


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The government also allowed the private entrepreneurs duty-free import of furnace oil to run their power plants with 9.0 per cent service charge along with import costs as an incentive, said a senior official of Power Division under the Ministry of Power, Energy and Mineral Resources. Alongside the rental power plants the government also had a plan to install a number of big peaking power plants as 'mid-term' and 'long-term' measures. The Power Division also then had planned to retire the rental-and quick-rental power plants after expiry of their initial tenures and bring down the electricity tariffs as well, he added. But, instead of retiring 'expensive' rental-and quick-rental power plants, the government continued extending their tenures and installed more such plants with the capacity-payment provision intact in the order, the official said. For a lack of monitoring and supervision from the government, the mid-term power plants 'failed' to come up, he said. As a consequence, the electricity tariffs for retail-level consumers were hiked seven times-almost doubling it from previous rates-instead of reducing that as per government's initial plan. Furthermore, the government recently moved to award afresh over a dozen oil-fired power plants to private sector under the special law that skips tendering, keeping the provisions of capacity payment, and 9.0 per cent service charge. Currently, the country has a total of 43 oil-fired power plants, of which 34 with a total generation capacity of 2567 megawatts (MW) are furnace oil-fired and the remaining nine with a total capacity of 846MWs are diesel-based plants. "The government is keeping intact the way of making hefty money by a section of 'unscrupulous' power entrepreneurs by relying heavily on rental-and quick-rental power plants for electricity generation," energy adviser of the Consumers' Association of Bangladesh (CAB) Prof M Shamsul Alam told the FE Tuesday. He said the initial plan of the government to install such oil-fired power plants as a 'short-term' solution and retire them after initial expiry deadlines and subsequent reduction in tariffs was a 'pro-people' decision. But continued extension of the 'expensive' rental-and quick-rental power plants with capacity-payment provisions went the way of dishonest businesspeople, he added. Electricity tariffs continued to rise over the past several years as an outcome of the government's 'wrong' policy, said the CAB adviser, adding: "It is not at all an ideal policy". Apart from furnace oil-fired power plants, the government is also continuing with high-cost diesel-run rental power plants, which he said is raising electricity-generation costs further. Former director-general of the state-run Power Cell BD Rahmatullah said the government's mid-term plan to build large low-cost power plants "failed due to 'intentional' negligence of the sponsors most of whom also own rental-and quick-rental power plants". He termed the government's dependence on expensive oil-fired rental power plants a 'total failure'. "A powerful syndicate is active in the country to keep it continued," he alleged. Although this government is completing two consecutive tenures in power, it is still in 'crisis-management' mood for power sector, said Prof Ijaz Hossain of Bangladesh University of Engineering and Technology (BUET). "It's a total failure," he said. The engineering professor feels that the government should have implemented at least several big power-plant projects in the meantime. Source: http://print.thefinancialexpress-bd.com/2017/07/12/177581

http://print.thefinancialexpress-bd.com/2017/07/12/177581


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INFLATION UP AMID PRICE RISES Point-to-point inflation in June, fuelled by price rises of some food and essential items, was the highest, 5.94 per cent, in 18 months, according to official data made available Tuesday. The rate of inflation 18 months back in January 2016 was highest at 6.07 per cent. And since the following month, this important macroeconomic indicator had maintained a lower trend up to December.

However, the inflationary trend took an upturn in January 2017 and climbed to 5.94 per cent last month, June 2017, the Bangladesh Bureau of Statistics (BBS) data showed. Economists predict far higher inflationary pressures in the near term as the country is facing some supply-chain problems with rice in addition to floods in some areas of the country with severe crop damage in haor regions recently. According to the national statistical body, BBS, the inflation dropped to 5.03 per cent in December 2016 from a peak of 6.07 per cent at the beginning of the month of January the same year. It showed the rate of point-to-point inflation stared rising in January this year when it was recorded higher at 5.15 per cent. In the subsequent month, February, it had increased to 5.31 per cent, in March to 5.39 per cent, in April to 5.47 per cent and in May to 5.76 per cent. Meanwhile, the 12-month average inflation rate in the just-concluded financial year (FY) 2016-17 was recorded 5.44 per cent. In the previous FY2016, the average inflation was higher at 5.92 per cent and in the FY2015 it was 6.41 per cent. Planning Minister AHM Mustafa Kamal, after the Executive Committee of the National Economic Council (ECNEC) meeting Tuesday, unveiled the point-to-point inflation data of the last quarter (April-June) of the past FY. In the last quarter of the FY2017, the inflation rate increased to 5.72 per cent from a comparatively lower rate of 5.28 per cent in the previous quarter (January-March), he told journalists. Mr Kamal said as prices of some essentials like rice, oil and cooking gas increased over the last few months, the inflation in the last quarter rose "a little bit compared to the previous quarter of the year". Explaining the cascading impact of the state of inflation, professor of Economics of Dhaka University Dr MA Taslim said the country had already faced two types of hurdles in recent days: one from the supply side and another from the internal side. "The government has opened the import of rice which could bring some inflation. Besides, since the government has failed to implement 15 per cent VAT in the national budget, the deficit financing will swell. "Then the government will go for bank borrowing, which means the supply of money will increase in the local market. Then there will be another possibility of inflation hike," he told the FE about the knock-on effect. He said that the central bank and the finance ministry should be cautious for controlling the possible higher inflationary pressure in the days ahead.


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Prof Taslim also suggested the government unveil the monthly inflation data instead of quarterly so that the researchers and economists could analyse properly one of the major macroeconomic indicator -inflation. According to the BBS, the rate of point-to-point inflation climbed both in urban and rural areas in June. It showed the point-to-point inflation on food and non-food items up in June as those were recorded at 7.51 and 3.67 respectively from that of 7.36 per cent and 3.44 per cent in the previous month of May. The inflation on this count touched both rural and urban areas alike. In rural areas the inflation increased to 5.65 per cent in June compared to 5.57 per cent in May 2017. The national statistical body's data put the inflation in the urban areas in June at 6.49 per cent in a rise from of 6.11 per cent in May. Source: http://print.thefinancialexpress-bd.com/2017/07/12/177583

BB PROBE DETECTS ANOMALIES IN FINANCIALS OF FIRST FINANCE The central bank has recently detected anomalies of serious nature in the annual financials of the First Finance Ltd, a listed non-banking financial institution (NBFI). The NBFI in question allegedly resorted to doctoring of the financial statements with a view to announcing 5.0 per cent stock dividends for the shareholders for the calendar year 2016. However, scrutiny of audited balance sheet, profit and loss accounts, statement of analysis for provision of interest expense and relevant other documents revealed a number of inconsistencies/ anomalies. In a letter issued on 14 June, BB said that it was mandatory for the NBFIs to get no objection certificate from BB before announcing dividend if the non-performing loan (NPL) was 10 per cent or higher. First Finance Ltd posted the announcement of dividend on the DSE website on April 30 this year despite having 33 per cent NPL. It also did not take 'no objection' certificate from the central bank. The BB accused the company of violating the Financial Institution Act of 1993. It also served show-cause notices on the managing director, chief financial officer (CFO) and company secretary and asked them to submit their replies within seven days. However, the BB issued no-objection certificate to the First Finance to disburse 5.0 per cent stock dividend under 'special consideration'. First Finance Ltd which was a 'z' category company in the stock market was upgraded to 'b' category following the announcement of the latest stock dividend. The company was listed on bourses in 2003. The closing price of the issue on Monday was Tk 11.50 on the DSE. In its balance sheet and profit-loss statement for the year 2016, First Finance showed the retained earnings and net profit at Tk 63.64 million and Tk 50.12 million respectively. But the retained earnings shown in the profit-loss statement submitted with the 'Analysis for Provision of Interest Expense' was in the negative. The retained earnings in the latter case were minus Tk 24.72 million. The BB also found that First Finance has shown Tk 1.86 million as interest payable against a term deposit totalling Tk 5.52 billion. The actual amount of payable interest will be Tk 243.34 million. It is a clear violation of article 27 of the International Accounting Standards and the Bangladesh Accounting Standards, the central bank in its letter said. The central bank also said that the First Finance violated the article 10 of Financial Institution Act 1993 while announcing dividend despite having negative retained earnings. While contacted, a senior BB official told the FE that the central bank has given conditional approval to the company to give 5.0 per cent dividend. Regarding the anomalies, First Finance senior executive vice president and consultant Mr Mansur said the dividend has been approved by the board where an observer from BB was also present.



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'I don't want to comment as the proposal was submitted to the board and approved by it with BB observer present there,' he said. There was no inconsistency rather there was shortfall in the provision worth Tk 63 million. "If we could give the dividend the shareholders would have been the gainers," he said, adding: there is neither any issue of hiding nor stealing. In the meanwhile, following a writ petition filed by some shareholders, a High Court Division bench has stayed the holding of the annual general meeting (AGM) by the First Finance, scheduled for June 15 last, for a period of six months. Source: http://print.thefinancialexpress-bd.com/2017/07/12/177580

MORE COS ISSUING CASH DIV THAN BONUS SHARES The number of dividend recommendations in the form of cash has been on rise in recent years against the declining trend of issuing bonus shares by the listed companies. Experts and stakeholders said the number of companies issuing bonus shares is gradually declining because of multiple reasons, including their lack of further business expansion plan and lock-in on bonus shares held by sponsor-directors.

Some of them said the increasing trend of issuing cash dividend is good for both the market and shareholders as well. A total of 165 companies issued stock dividend in 2012, 152 companies in 2013, 144 companies in 2014, 146 companies in 2015 and 125 companies in 2016, according to the information of Dhaka Stock Exchange (DSE). The number of listed companies rose gradually from 2012 to 2016. But the number of companies, which issued bonus shares, declined gradually during this period, snapping the declining trend of issuing bonus shares. The DSE data also showed that the number of listed companies issuing cash dividend increased from 2012 to 2016. A total of 116 companies issued cash dividend in 2012, 128 companies in 2013, 159 companies in 2014, 176 companies in 2015 and 192 companies in 2016. Bonus shares are shares distributed by a company to its current shareholders as fully-paid shares free of charge to increase capital to implement new business plan. Anis A Khan, vice president of Bangladesh Association of Publicly Listed Companies (BAPLC), said the companies increase their capital through bonus issues in accordance with their necessity. "I do not think that the number of companies issuing bonus shares has declined because of reasons such as lock-in on sponsor-directors' bonus shares. The number of companies willing to issue bonus shares will depend on capital requirement," he added. According to DSE information, the number of companies that issued bonus shares rose from 2009 to 2012. Above 328.34 million bonus shares were issued by different companies in 2009, above 753.01 million in 2010, above 3.36 billion in 2011 and above 4.71 billion in 2012. Later, the amount of bonus shares declined gradually until 2016.



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Former chairman of the securities regulator Dr A B Mirza Azizul Islam said the investors' preference to cash dividend may be a reason behind the reduction in the number of stock dividend declaration. "Many companies may have no further expansion plan, and it can be a reason behind the fall in the number of companies issuing stock dividend," he noted. Previously, the sponsor-directors had no legal bar to sell bonus shares, other than the shares held at the time of approving IPO (initial public offering) proposals, issued after the companies' listing with the stock exchanges. On November 30, 2015 the securities regulator imposed two-year lock-in on the bonus shares, owned by the directors and individuals having at least 5.0 per cent shares of the newly-listed companies. The regulatory measure came following the allegation that the sponsor-directors have a tendency to take profits by offloading bonus shares just after listing of the companies. A DSE official said the mandatory lock-in on bonus shares, held by sponsor-directors, is one of the reasons behind the fall in the number of listed companies issuing bonus shares. "Many companies previously issued bonus shares. But presently they are refrained from bonus declaration to avoid dilution effects," he observed. Mohammad Ali, chief operating officer of Dhaka Bank Securities, said the dividend recommendation entirely depends on the board of directors. "The board decides whether the company needs further capital expansion. The rising trend of issuing cash dividend is market-friendly," he further said. The tendency of issuing bonus shares has been observed more with the local companies than the multinational ones listed with the bourses. The multinationals, such as - British American Tobacco, Marico Bangladesh and Reckitt Benckiser etc, issued cash dividend up to 750 per cent in recent years. Source: http://print.thefinancialexpress-bd.com/2017/07/12/177552

DSE DAILY TURNOVER CROSSES TK 13B-MARK Daily trade turnover on Dhaka Stock Exchange (DSE) crossed Tk 13-billion-mark Tuesday as investors continued to put fresh stakes on stocks amid optimism.

Turnover, a crucial indicator of the market, stood at Tk 13.21 billion on the country's premier bourse, climbing further by 4.50 per cent over previous day's mark of Tk 12.64 billion. It was also the biggest single-day transaction in the last five months since February 26, when the turnover total was also recorded Tk 13.93 billion. Along with the increasing turnover value, DSEX, the prime index of the DSE, continued to hold its positive momentum, adding 3.58 points more to settle at a historical high of 5,831 points, since its inception on January 27, 2013. The total market capitalisation of the DSE also rose to an all-time high of over Tk 3,893 billion on the day, surpassing the previous high of Tk 3,891 billion recorded on Monday. Market insiders said investor enthusiasm sustained as local and foreign investors remained active in the market amid optimism, taking the market turnover above Tk 13 billion-mark.



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"Declining interest rate on bank deposit, possible interest cut on saving instruments, revision of budget coupled with optimism of June closing year-end earnings and dividend declarations continued to prompt investors to inject fresh funds into stocks," said an analyst. However, he advised the investors to invest carefully in a rising market and should analyse the fundamentals of securities beforehand. Bank sector emerged as turnover leader, grabbing 22 per cent of the day's total turnover, followed by textile 14 per cent and pharmaceuticals 11 per cent. Bank sector also posted the highest gain of 0.90 per cent, riding on the price appreciation of Islami Bank which gained 7.10 per cent alone followed by Eastern Bank with 3.90 per cent. International Leasing Securities, a stockbroker, said, "Stocks closed almost flat as investors were active in both sides of the trading fence throughout the session". The stockbroker noted that the market opened higher, but risk-averse investors went for profit booking frenzy on the issues of financial institutions, textile and fuel & power sectors, sending the market into flat zone. "Recent stable scenario of the market coupled with healthy turnover attracted the sideline investors to take fresh position in the market," the stockbroker said. IDLC Investment, a merchant bank, said, "The market passed a volatile session with broad index, DSEX, gaining 54 points within first hour of trading. However, sellers eventually took the charge opting for profit booking from the recent trail of gain, sending the market flat zone". Losers, however, took a strong lead over the gainers, as prices of 195 securities declined, 107 advanced and 29 remained unchanged out of the 331 issues that were traded on the DSE floor. Beximco topped the DSE turnover chart with about 17.20 million shares of Tk 609 million changing hands, followed by Keya Cosmetics, Islami Bank, Agni Systems and City Bank. Agni Systems was the day's highest gainer, posting 7.30 per cent gain, while Bangas was the worst loser, losing 6.70 per cent. The port city bourse, the Chittagong Stock Exchange (CSE), also edged higher with its Selective Categories Index - CSCX - advancing nearly 36 points to settle at 10,952 points. Losers beat gainers as 145 issues closed lower, 94 closed lower and 21 remained unchanged on the CSE. The port city bourse traded 31.26 million shares and mutual fund units' worth Tk 767 million in turnover. Source: http://print.thefinancialexpress-bd.com/2017/07/12/177553

FOUR BANKS AMONG THE TOP TRANSACTION CHART Top ten traded companies captured nearly 25 per cent transaction of the premier bourse while Beximco dominated the turnover chart on Tuesday. The total transaction on the Dhaka Stock Exchange (DSE) stood at Tk 13.21 billion on the day, which was 4.50 per cent higher than the previous day's turnover of Tk 12.64 billion.



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Beximco, Keya Cosmetics, Islami Bank, Agni Systems, City Bank, Mercantile Bank, Prime Bank, Saif Powertec, Fu-Wang Food and Confidence Cement were the most-active shares in terms of value on the DSE. Of them, share price of six companies advanced up to 7.30 per cent, two faced mild correction while two remained unchanged on the day over the previous session. According to the statistics available with the DSE, about 17.20 million shares of Beximco were traded, generating a turnover of Tk 609 million, which was 4.62 per cent of the premier bourse's total turnover value. The company's share price hovered between Tk 34.80 and Tk 35.70, before closing at Tk 35.60 on the day, advancing 2.30 per cent over the previous session. Keya Cosmetics, which dominated the turnover chart for the past three consecutive sessions, followed next, with shares of Tk 538 million changing hands. It was 4.07 per cent of the day's total turnover. The company's share closed at Tk 18.10, losing 0.55 per cent after advancing 30 per cent in the past one month. Islami Bank emerged as third with shares of Tk 445 million changing hands, grabbing 3.36 per cent of the total turnover value. The bank's share price jumped 7.10 per cent to close at Tk 36.20 each. It was also the day's second highest gainer. Agni Systems notched the fourth spot, with shares of Tk 326 million changing hands, which was 2.46 per cent of the turnover. The company's share price closed at Tk 29.40, soaring 7.30 per cent. It was the day's top gainer. City Bank featured a turnover of Tk 263 million which was 1.99 per cent of the day's total transaction. The bank's share price closed at Tk 37.70, remaining unchanged over the previous day. The turnover of Mercantile Bank was Tk 229 million, capturing 1.73 per cent of the day's total value. The bank's share price remained unchanged to close at Tk 24.90 each. Prime Bank featured a turnover of Tk 228 million, which was 1.72 per cent of the day's total value. The bank's share price advanced 0.40 per cent to close at Tk 24.90 each. The turnover of Saif Powertec was Tk 226 million, grabbing 1.71 per cent of the day's total turnover value. The company's share price closed at Tk 46.80, losing 1.47 per cent. Fu-Wang Food featured a turnover of Tk 222 million, which was 1.68 per cent of the day's total. The company's share price advanced 1.71 per cent to close at Tk 22.80 each. Source: http://print.thefinancialexpress-bd.com/2017/07/12/177554

INVESTORS BOOK PROFIT ON QUICK-GAINING STOCKS Stocks witnessed a marginal gain Tuesday as investors from both sides of the trading fence remained active throughout the trading session. Brokers said market kept the positive momentum for the third straight session with the key index of the Dhaka Stock Exchange (DSE), hitting new high since its inception on January 27, 2013 amid optimism. They said the gradual rising trend in turnover in recent days tempted the sideline investors to inject fresh fund into stocks, especially banks, taking the market turnover to five-month high to Tk 13.21 billion. The prime index of the DSE was sky rocketed since the opening bell, gaining more than 54 points within first hour of trading. The sharp gain, however, ended in an abrupt correction, shedding the entire initial gain as investors booked profit on quick-gaining stocks. In the latter half of the trading session, DSEX remained sideways, closing the session almost flat. After four hours trading, DSEX, the prime index of the DSE, went up by 3.58 points or 0.03 per cent to finish at a historical high of 5,831 points, since its inception on January 27, 2013.



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The country's prime bourse launched the DSE Broad Index (DSEX) on January 27, 2013 with a base point of 4,055.90, replacing the DSE General Index (DGEN). However, DGEN, the then key index of the DSE, rose to an all-time high at 8,918.51 points on December 5, 2010, when the market was bullish before crash. The two other indices also finished higher. The DS30 index, comprising blue chips advanced 4.45 points or 0.21 per cent to finish at 2,127. The DSE Shariah Index (DSES) gained 2.17 points or 0.16 per cent to close at 1,322. According to a market review of EBL Securities, "Stocks witnessed a slight gain as investors from both sides of the trading fence remained active throughout the trading session." The stockbroker noted that the market started with an upward note followed by correction in regular intervals, finally edged 3.58 points higher. "Investors spurred their buying spree on stocks from bank, cement and miscellaneous," said the stockbroker. A total number of 0.187 million trades were executed in the day's trading session, generating a turnover of Tk 13.21 billion with trading volume of 480.28 million securities. Meanwhile, block transaction contributed only Tk 104 million to the day's total turnover. "The market witnessed a volatile session, reflecting investors' indecisive mindset," commented AT Capital Partners, an asset management company, in an analysis. The AT Capital noted that most of the prominent sectors, except bank and cement, underperformed the market. LankaBangla Securities, said within the first hour, index gained 54 points, and then within the next hour, index went down to 5,823-level. During the last half of the session, index recovered from its negative position and closed flat at 5,831-level. Among the major sectors, all except four, registered negative return. Bank, cement, food & allied, and telecommunication sectors were the only major sectors with positive returns that registered 0.90 per cent, 0.35 per cent, 0.10 per cent, and 0.08 per cent return respectively. Non-bank financial institutions witnessed the highest correction of 0.93 per cent, followed by textile with 0.70 per cent, fuel & power 0.26 per cent. Both pharmaceuticals and engineering issues remained flat in red at 0.07 per cent. Losers outnumbered the gainers as out of 331 issues traded, 195 advanced, 107 declined and 29 remained unchanged on the DSE trading floor. Beximco topped the DSE turnover chart with about 17.20 million shares of Tk 609 million changing hands, followed by Keya Cosmetics, Islami Bank, Agni Systems and City Bank. Agni Systems was the day's highest gainer, posting 7.30 per cent gain, while Bangas was the worst loser, losing 6.70 per cent. Source: http://print.thefinancialexpress-bd.com/2017/07/12/177559

DEFAULTED LOANS GROW 191PC IN 8YRS Defaulted loans in the countrys banking sector recorded 191 per cent growth in the past eight years demonstrating that the culture of bad loan gained a foothold further during the back-to-back tenure of the Awami League-led government. Experts, however, linked the massive growth of defaulted loans with illegal capital flight which marked substantial rise during the same period. They said that the government should speed up the legal process in the Artha Rin Adalat (financial loan court) to recover the non-performing loans that stood at Tk 1,11,347 crore until April 2017 despite relaxation of loan rescheduling policy. Official data of the Bangladesh Bank showed Tk 36,150 crore of the defaulted loans as write-offs.



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In a sharp contrast, the central bank data showed that the defaulted loan was Tk 38,148 crore including Tk 15,667 crore write-off in 2009 when the Awami League government assume power. Former interim government adviser Mirza Azizul Islam told New Age on Tuesday that major portion of the credit was sanctioned in the back-to-back tenures of the present government on political consideration. The banks failed to recover those loans as the defaulters used political links, he noted. He suspected that many of the defaulters were resorting to send the money abroad, he said. The rise of capital flights from the country against the backdrop of lull in private investment was also evident in the latest data of deposits by Bangladeshis in Swiss banks. The annual report released by the Swiss National Bank on June 30 revealed that deposits by Bangladeshis in Swiss banks increased to CHF 667.40 million (equivalent to $694.15 million or about Tk 5,553 crore) in 2016 over CHF559.25 million (equivalent to $582.43 million or Tk 4,423 crore) in 2015. The report showed that deposits in Swiss banks by Pakistanis decreased by 6 per cent to CHF 1.4 billion and by Indians decreased by 45 per cent to CHF 675.75 million in 2016. Former Bangladesh Bank deputy governor Ibrahim Khaled said that a chunk of defaulted loans might have been laundered abroad in the recent years. The state-run banks would be major victims of money laundering as their overall monitoring was weaker than the private commercial banks, he said. Washington-based Global Financial Integrity, in its latest report in May 2017, said that illegal fund outflows cost Bangladesh $8.97 billion in 2014. It also said that Bangladesh lost $75.15 billion due to trade miss-invoicing and other unrecorded outflows between 2005 and 2014 which demonstrated that the capital flight from the country was much higher than foreign direct investment the country received. The foreign direct investment grew 4.38 per cent to $2.33 billion in 2016, according to United Nations Conference on Trade and Development. Economists said that the defaulted loans would not pose much threat unless the errant borrowers laundered the money abroad. They also said that corrupt people were transferring their ill-gotten money to abroad as the country had strategic deficiencies in checking capital flights. Finance minister Abul Maal Abdul Muhith told parliament on Monday about the overall defaulted loans in the banking sector and disclosed 100 top defaulters. He, however, did not give the amount of defaulted loans against the individual defaulters. He did not also disclose how many loan defaulters were in the country. On June 20, he had informed the parliament that 2,02,623 individuals or companies, who had borrowed money from 55 state-run and private commercial banks, defaulted on their loans till March 2017. Source: http://www.newagebd.net/article/19564/defaulted-loans-grow-191pc-in-8yrs

GOVTS FY17 BANK BORROWING LOGS NEGATIVE TK 18,029CR The governments net bank borrowing registered negative Tk 18,029.10 in the just-concluded fiscal year 2016-17 due to massive investment on national savings certificates, Bangladesh Bank officials said. But the government made a huge amount of borrowing worth Tk 16,900 crore from the banking sources in June, the last month of the FY17, to manage its deficit financing of the fiscal budget. The government maintained a large repayment trend in most of the period of the last fiscal year, but its borrowing heavily jumped in the last month of FY17 to implement the annual development programme, a BB official told New Age on Tuesday.

http://www.newagebd.net/article/19564/defaulted-loans-grow-191pc-in-8yrs


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The governments net bank borrowing registered negative Tk 18,029.10 in the FY17 as it repaid Tk 6,117 crore to the central bank and repaid Tk 11,912 crore to commercial banks, according to the central bank data released on Tuesday. The government set a target of borrowing Tk 38,938 crore from the banking source in FY17 to manage its budget deficit, but it did not make any net borrowing from the banking sources due to a large amount of net sales in government savings certificates and bonds. The governments net borrowing from the banking sector stood at Tk 329.29 crore in FY16 against the annual borrowing target of Tk 38,523 crore. The government was forced to borrow Tk 46,669 crore in the July-May period of FY from the savings tools due to a higher interest rate on the instruments compared to other prevailing rates offered by the banks. An official of the Directorate of National Savings told New Age on Tuesday that although the DNS was yet to get the investment data of June, the net investment in the savings tools might have crossed Tk 50,000 crore in the FY 17 as there was huge rush to buy the NSCs in the last month of the year. People are now being forced to invest their money in the NSC savings tools as the banks are offering hardly 7 per cent interest rate on their deposit products. The rates offered by the NSCs are between 11.04 per cent and 11.76 per cent, a BB official said. The high returns on the savings tools are pushing up the governments interest liability as the government usually borrows from treasury bills and bonds, that carry interest rates between 2.84 per cent and 7.60 per cent, to manage its deficit financing of the fiscal budget, he said. In the budget for FY17, the government aimed to borrow Tk 19,610 crore from the NSCs, but it later revised the figure and set a borrowing target of Tk 45,000 crore. The BB official said that the high net investment in the savings tools would continue this fiscal year if the government did not cut the rate on the savings tools. Source: http://www.newagebd.net/article/19547/govts-fy17-bank-borrowing-logs-negative-tk-18029cr

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